Category Archives: diamonds

Further troubles lie ahead as Ottawa’s attempt at modernizing major resource project approval processes reveals a divided Canada

Further troubles lie ahead as Ottawa’s attempt at modernizing major resource project approval processes reveals a divided Canada

By Darrell Stonehouse

June 29, 2017, 1:21 p.m.

http://www.jwnenergy.com/article/2017/6/further-troubles-lie-ahead-ottawas-attempt-modernizing-major-resource-project-approval-processes-reveals-divided-canada/

Kinder Morgan tanker at terminal

Image: Kinder Morgan Canada

 

Call it an exercise in herding cats.

Only one year into the federal government’s efforts to reshape Canada’s environmental and regulatory processes surrounding resource development, and it’s already revealed a country deeply divided on how to assess environmental concerns with new projects and how to regulate industry to mitigate any issues.

The federal government launched its multi-department review last June after instituting a temporary system in January for projects already under environmental assessment. The goal is to replace the environmental assessment legislation put in place by Stephen Harper’s Conservatives in 2012, while modernizing the National Energy Board (NEB), Fisheries Act, and Navigation Protection Act.

The rationale for the review is to “restore Canadians’ trust in environmental assessments,” said Catherine McKenna, the federal minister of environment and climate change.

“The review of Canada’s environmental and regulatory practices will ensure that decisions are based on science, facts and evidence,” added Kirsty Duncan, the federal minister of science.

Over the last year, the government has been gathering submissions and holding public hearings to get input from Canadians across the country. In early April, the expert panel reviewing the environmental assessment process released its recommendations. A similar report concerning the modernization of the NEB was released in mid-May.

The preliminary results from the environmental review show the challenges of trying to balance environmental stewardship with industrial growth.

“Views about federal environmental assessment across the various interests ranged from support to all-out opposition,” the environmental panel said in its report to the government.

The view from industry

Industry was looking for a number of things from the review, including assurances that any new regulations wouldn’t further harm the country’s competitiveness.

“Canada is competing globally for capital investment in our oil and gas resources, and it is imperative for the Canadian economy that Canada remain competitive with other jurisdictions,” Jim Campbell, Cenovus Energy’s vice-president of government and community affairs, told the task force on behalf of his company.

Campbell pointed to a recent study and survey showing the Canadian industry is falling behind competitors when it comes to competing for capital. “Primary reasons cited Canada’s decline include regulatory duplication and inconsistencies and complexity of environmental regulations,” he noted.

In its submission to the task force, Suncor Energy, like most others from industry who offered input, said the federal review process should dovetail with, rather than overlap, provincial and local review processes. The process should, “accent, not duplicate, provincial reviews,” said Suncor. “One project, one assessment. Duplicate reviews do not add additional protections and can add years to project applications.”

The federal assessment “should be a process to assess residual environmental risks in areas of federal jurisdiction,” Suncor added.

Cenovus, with most of its primary assets in Alberta, agreed primary responsibility for environmental assessments should remain with the provinces.

“Local regulators have the experience and technical expertise to best evaluate projects, work with local communities and perform follow-up monitoring and compliance,” noted Campbell.

Campbell also said federal and provincial environmental assessment processes should be streamlined by allowing for substitution and equivalency agreements based on the principles of the best-placed regulator to do the work and a single-window approach.

When it comes to addressing First Nations’ concerns, Suncor said the federal government, rather than industry, must take a leadership role, pointing out that the review “must ensure the Crown is upholding its duty to consult.”

“Proponents have the responsibility to support the Crown through direct engagement and partnership with affected communities, incorporating traditional knowledge through applications and developing projects in a sustainable manner,” Suncor added.

The oilsands giant said the people and communities closest to projects should be at the front of the line when it comes to consultations in environmental assessments.

“Reviews must allow those most directly affected by the outcome of a particular project to have the greatest opportunity to participate and have a voice in the process,” it noted. “Input from affected stakeholders can get diluted when the process is used for purposes other than gathering information on a specific project.”

Suncor and other resource companies and associations also said they don’t believe the review process should be hijacked by groups wanting to debate larger public concerns outside the boundaries of the project. Governments should first set public policy direction on these broader issues like climate change, and then the review process should ensure public policy standards are met.

“The review process is not the appropriate venue for debating broader public policy,” the company said.

Another key element for industry and provinces with resource-based economies in the review process was ensuring the designated projects section of the Canadian Environmental Assessment Act, 2012 remained in place. Projects including minerals mining (such as potash), linear developments (transmission lines and highways) that do not cross provincial boundaries, extraction of non-potable groundwater, in situ oilsands developments and natural gas facilities were removed from the list of projects requiring federal assessments in the 2012 legislation.

“Removing these projects from federal [environmental assessment] review saved time and cost by greatly reducing unnecessary duplication of [assessments] and other regulatory processes, reducing red tape for proponents while maintaining robust provincial environmental safeguards,” said the government of Saskatchewan in its submission. “The province advocates for the exclusion of such projects from federal review, recognizing mature and effective provincial environmental regulatory review processes.”

Green groups, First Nations look for greater participation in process

While industry looked to streamline the environmental assessment process and provide certainty to investors, environmentalists and First Nations looked for greater input into the process and for the federal government to expand the list of designated projects that require federal approval. Many also requested a climate test be included in the process.

West Coast Environmental Law said it was looking for a “next-generation assessment law” that accounted for the economic, ecological and social aspects of sustainability, that respected First Nations authority and governance, that provided for full public participation, and that connected the assessment, decision-making and action of different levels of government.

They also wanted the law to “address the causes and effects of climate change, include strategic and regional assessment as fundamental components, and to require appropriate assessment of the thousands of smaller projects currently not being studied.”

“This isn’t the time to make small adjustments to a deeply flawed process—we need a new law that ensures the health of Canadians and the environment, and this is our chance to get it right,” said Stephen Hazell, the director of conservation and general counsel at Nature Canada.

Recommendations favour expansion of federal role in assessments

The initial report from the expert panel is promising many of the big changes environmentalists and others who submitted opinions wanted. The first is a major expansion in the assessment process beyond the environmental impacts of a project.

“We outline that, in our view, assessment processes must move beyond the bio-physical environment to encompass all impacts likely to result from a project, both positive and negative. Therefore, what is now ‘environmental assessment’ should become ‘impact assessment,’” the panel said. “Changing the name of the federal process to impact assessment underscores the shift in thinking necessary to enable practitioners and Canadians to understand the substantive changes being proposed in our report.”

This new assessment process would cover what the panel calls the “five pillars of sustainability: environmental, social, economic, health and cultural impacts.”

While industry said it would like to see public input limited to those most affected by the project, the panel also sided with environmental groups wanting to see broader public input. The panel also said that more meaningful public participation in the assessment process is a must.

“An overarching criterion of public participation opportunities in impact assessment processes is that these opportunities must be meaningful,” the report added. “A meaningful participation process needs to have the inherent potential to influence decisions made throughout the assessment, provide inclusive and accessible opportunities for early and ongoing engagement from the public and indigenous groups, and provide the capacity required for active participation in the engagement.”

The panel said current rules regarding public participation are lacking and have been perceived as having been designed to “limit public participation in the assessment process.”

The panel believes the NEB’s adoption of the “standing test” has greatly hindered trust in its assessments.

“The degree to which this test has limited participation is evident through NEB participation data. The outcome of this is not an efficient assessment process or timely incorporation of public input into a decision-making process,” the panel said. “In the case of the Trans Mountain Expansion project review, a ministerial panel was convened after the NEB assessment process was completed, at least in part to hear from those who felt shut out of the initial process. In short, limiting public participation reduces the trust and confidence in assessment processes without bringing any obvious process efficiency.”

“The panel recommends that…legislation require that [an impact assessment] provide early and ongoing participation opportunities that are open to all,” the report said. “Results of public participation should have the potential to impact decisions.”

The expert panel also questioned the need for time limits on the review process, suggesting that instead, the time frame of the review process be project-specific. The current process, put in place in 2012, requires environmental assessments of projects that occur on federal lands, such as pipelines, to be completed within one or two years, depending on the project’s size and complexity.

“This has not met the objective of delivering cost- and time-certainty to proponents,” the report said. “Our recommended approach seeks to build public confidence in the assessment process. We believe that public trust can lead to more efficient and timely reviews. It may also support getting resources to market.”

The expert panel also recommended a number of ways to increase First Nations participation in the assessment process, including implementing the principles of the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), “especially with respect to the manner in which environmental assessment processes can be used to address potential impacts to potential or established aboriginal or treaty rights.”

The panel recognized that there are broader discussions that need to occur between the federal government and indigenous peoples with respect to nation-to-nation relationships, overlapping and unresolved claims to aboriginal rights and titles, reconciliation, treaty implementation and the broader implementation of UNDRIP. According to the panel, many of these discussions will be necessary prerequisites for the full and effective implementation of the recommendations contained in the report.

Among its recommendations regarding indigenous people, the panel suggested that indigenous peoples be included in “decision-making at all stages of the assessment process, in accordance with their own laws and customs.”

It also suggests First Nations be funded adequately to allow meaningful participation in the process and be given the time to review information.

The panel report defines the criteria for the type of projects that should be federally reviewed and limits the criteria of projects that are included for federal review in the designated projects list.

“Many participants favoured the continued use of a project list approach to trigger federal assessments because it is predictable and clear and places the focus on major resource projects,” wrote the panel.

“Requiring an assessment for projects with minor impacts was described as too burdensome and time-consuming for proponents and lacking proportionality. Participants also said, however, that the current project list is too focused on certain industries, such as mining, and should be revisited to ensure that the list more accurately reflects projects with the highest potential for adverse effects, with some participants indicating that in situ oilsands projects and hydraulic fracturing activities should be included.”

The committee recommended only projects that affect federal interests should be included on the list. This differs from the current approach that includes projects that may not affect matters of federal interest. And it said there should be an appropriate threshold for effects on federal interests so that a trivial impact does not trigger an assessment.

“A new project list should be created that would include only projects that are likely to adversely impact matters of federal interest in a way that is consequential for present and future generations,” said the committee.

On the issue of government jurisdiction, there was widespread support for the idea of “one project, one assessment.”

However, a key goal of the assessment process is to leverage the knowledge of all government levels.

“In Canada, many jurisdictions have the expertise, knowledge, best practices and capacity to contribute to impact assessments,” said the panel. “For example, the federal and provincial governments may focus on closely related issues, such as impacts to water quality versus impacts to a fishery. Yet indigenous groups also have relevant knowledge on these topics related to the practice of their aboriginal and treaty rights, their traditional and ongoing land use, and their laws, customs and institutions. Similarly, municipalities are the custodians of land use and the full range of local impacts that affect residents and their communities.”

The committee said it believes the best way to connect all these areas of expertise is through a co-operative approach.

“To date, the best examples of co-operation among jurisdictions have been joint-review panels backed up by general co-operation agreements between Canada and many provinces,” said the committee. “As such, expanding the co-operation model to include all relevant jurisdictions is the preferred method to carry out jurisdictional co-ordination.”

Climate change a sticky issue

The expert panel said the issue of climate change has proved difficult to address under existing environmental assessment regulations.

“Current processes and interim principles take into account some aspects of climate change, but there is an urgent national need for clarity and consistency on how to consider climate change in project and regional assessments,” it said.

The panel said criteria, modelling and methodology must be established to assess a project’s contribution to climate change, consider how climate change may impact the future environmental setting of a project, and consider a project’s or region’s long-term sustainability and resiliency in a changing environmental setting.

Industry is concerned the issue of climate change has sidelined project assessments and turned them into debates over government policy. The panel addressed this issue by recommending the federal government lead a strategic impact assessment or similar co-operative and collaborative mechanism on the Pan-Canadian Framework on Clean Growth and Climate Change to provide direction on how to implement the framework and related initiatives in future federal project and regional assessments.

 

Liberals vow greater Indigenous input, tougher environmental hurdles for resource projects

Liberals vow greater Indigenous input, tougher environmental hurdles for resource projects

SHAWN MCCARTHY

OTTAWA — The Globe and Mail

Published Thursday, Jun. 29, 2017 4:36PM EDT

Last updated Thursday, Jun. 29, 2017 4:48PM EDT

 

The Liberal government is proposing new rules that would require resource companies to consult with Ottawa and indigenous communities on major projects well before the firms finalize their plans and apply for regulatory approval.

The companies would also be expected to provide greater opportunity for partnership with aboriginal Canadians, and seek indigenous peoples’ consent over whether developments that impact their traditional territory should proceed, though they would not have a veto.

The Liberals released a discussion paper Thursday that proposes sweeping changes to the federal regulatory review process for major projects, undoing many of the controversial changes put in place by the Conservatives just five years ago. The government plans to introduce legislation by the end of the year.

Its proposals call for additional environmental protection and increase public and indigenous involvement in decision-making in the review period, while insisting the new regime will “ensure good projects go ahead and resources get to market.”

The former Conservative government overhauled the assessment process in 2012, with the aim of accelerating decision-making; limiting the environmental considerations that would be taken into account, and preventing project opponents from bogging down hearings.

Echoing concerns of environmentalists and First Nations, the Liberals argued the Conservative tilted the process in favor of pipelines and other resource projects. In its discussion paper, the government says the current process is not transparent and lacks scientific rigor; fails to protect waterways and fisheries, and does not allow for sufficient participation by the public and indigenous Canadians.

Despite those shortcomings, the Liberals decided when they took power in late 2015 to review pipeline projects already in the queue under the existing process, saying it would be unfair to make the companies wait for the reforms. Instead, the government adopted “interim measures” that included increased consultations and an assessment of the greenhouse-gas-emission impacts of pipeline expansion.

The oil industry’s proposed pipeline expansions have drawn the most opposition, and have prompted an often-heated national debate over the risks and benefits of resource development, pitting Alberta and its oil industry against vocal opponents in British Columbia and Quebec.

However, the proposed reforms – which are to some degree driven by that debate – would not impact the major oil pipelines. Ottawa approved two projects last November – including the hugely controversial expansion of the Trans Mountain line to Vancouver – and is currently reviewing TransCanada Corp.’s Energy East project.

Industry officials reacted cautiously to the proposals on Thursday, saying they needed to to review the discussion paper to understand the full impact. The government proposes to keep the National Energy Board (NEB) as a regulator of ongoing operations, and maintain its office in Calgary, but the board would have a diminished role in the environmental assessment process.

The government proposes to create a single review agency that would replace the NEB in assessing pipeline and major energy projects, but the agency would work with the NEB to benefit from its technical expertise.

It aims to eliminate federal-provincial overlap by promoting a “one project, one assessment” approach, and would have legislated timelines for reviews, though ministers could approve exceptions.

The Canadian Energy Pipeline Association (CEPA) – which represents companies like TransCanada Corp – had proposed a two-step approval process, with an initial finding on whether a project was in the national interest and a more technical environmental assessment.

The Liberals’ discussion paper rejects that approach, but CEPA president Chris Bloomer said there are elements in the plan that could ensure the political debates and decision are made outside the environmental assessment process. “There’s a lot in the discussion paper that requires further definition,” Mr. Bloomer said. “We think we can work with it but this is not the end of the process.”

Mining projects are reviewed under the Canadian Environmental Assessment Act, which will also be up-dated. Canadian Mining Association president Pierre Gratton said he was pleased to see Ottawa rejected recommendations made this spring by a government-appointed advisory panel that industry feared would have greatly bogged down the review process.

However, one environmental lawyer said government’s proposals “fall far short” of establishing a process that would ensure sustainable development for the benefit of the communities. The measures “would not give Canada a leading-edge, world-class environmental review process,” Anna Johnston, staff lawyer at West Coast Environmental Law, said. “It would still let short-term economic benefit that go to a few trump environmental harm.”

 

 

 

Proposed diamond mine shows progress

Proposed diamond mine shows progress

By Jeff Labine

PANow

June 28, 2017 – 4:35pmUpdated: June 29, 2017 – 8:21am

Shore Gold FALC aerial

Shore Gold Inc. now owns 100 per cent of the Star-Orion South Diamond project.submitted photo

 

Shore Gold Inc. now owns 100 per cent of the Star-Orion South Diamond project, a move the president of the Saskatchewan Mining Association calls an important development.

The mining company made the announce last week that Shore Gold has taken over Newmount Canada FN Holdings participating interest in the Fort a la Corne joint venture, which resulted in full ownership of the proposed diamond mine project.

Shore Gold also announced a partnership with Rio Tinto Exploration Canada to further develop the project, which is located 60 kilometres east of Prince Albert. This was all good news for Pam Schwann, president of the Saskatchewan Mining Association.

“This is a really big, earth-moving project and really, it is going to require a company with both financial and technical resources to work with Shore to develop it,” she said. “With Rio Tinto coming forward, that’s a real win. Not only do they have the technical expertise and the funding to carry out the bulk sampling and hopefully, the development of the project but they also have expertise in diamond mining.”

Development of the Star-Orion project has been slow ever since Shore Gold started exploration into the area back in the mid-90s. Back in 2013, a major hurdle was cleared when then Conservative Environment Minister Leona Aglukkaq said the project wouldn’t likely cause significant adverse environmental effects and was given the go-ahead at the federal level.

The project is now awaiting approval from the provincial environment minister.

In February, the province committed to spend $137,000 to cover the consulting process for James Smith Cree Nation and Shore Gold. The Indigenous community has voiced concerns about the project especially given its close proximity to the Fort à la Corne provincial forest, which is used by James Smith members for trapping and hunting.

The community was given six months to voice any and all concerns.

Given the current economic situation the province is facing, Schwann said adding a diamond producer to Saskatchewan’s portfolio would do a lot to diversify the economy. She argued the diamond mine will generate more revenue for local businesses and provide a boost in the labour market.

While the diamond market isn’t high at the moment, Schwann said it’s not always prudent to wait for an upswing to develop. She added it’s sometimes better for companies to have everything in place for when the market turns positive.

“Optimally, if you are developing a mine, now is the time to do it,” she said.

paNOW reached out to James Smith Cree Nation for a comment for this story but no one was readily available prior to publication.

 

 

Rio Tinto Signs Deal That Could Make It Majority Owner of Star-Orion South Project

Rio Tinto Signs Deal That Could Make It Majority Owner of Star-Orion South Project

June 26, 17 by Albert Robinson

http://www.idexonline.com/FullArticle?Id=43196

 

(IDEX Online) – Diversified mining giant Rio Tinto has signed an option agreement which could potentially make it the majority owner of the Star-Orion South Diamond Project near Prince Albert in Canada that has been developed for many years Shore Gold Inc.

A feasibility study released by Shore Gold in 2011 cited a potential mine life of 20 years.

The company needs environmental approval from the provincial government for the mine which is based in Saskatchewan which does not have any diamond operations.

The agreement calls for Rio Tinto over the period of three years to spend $18.5 million on drilling and the pulling of a bulk sample before it can move on to receive the option of becoming a joint-venture partner and eventually owning 60 percent of the project.

It is not clear, however, how long it would take to bring the project to production.

A report by Shore Gold from two years ago said there are 55.4 million carats of rough diamonds at the resource which have an average price per carat of $210. Meanwhile, inferred resources, which are assumed to be present but not yet proven would provide a further 11.5 million carats.

 

Rio Tinto eyes Shore Gold diamond project east of Prince Albert

Rio Tinto eyes Shore Gold diamond project east of Prince Albert

ALEX MACPHERSON, SASKATOON STARPHOENIX
Published on: June 23, 2017 | Last Updated: June 23, 2017 3:24 PM CST

 Shore Gold FALC aerial

An aerial view of Shore Gold Inc.’s Star-Orion South diamond project in the Fort a la Corne forest about 60 kilometres east of Prince Albert, Saskatchewan. SHORE GOLD

Two weeks after its share price soared to a five-year high amid speculation over preliminary deal negotiations, a Saskatoon-based diamond exploration and development company has signed an option agreement with the British-Australian mining giant Rio Tinto that could be worth up to $75 million over the next seven and a half years.

Shore Gold Inc., which has been working to establish a diamond mine east of Prince Albert since 1995, said Friday in a news release that it simultaneously bought out its partner in the Fort à la Corne joint venture, thereby getting a 100 per cent stake in its Star-Orion South diamond project, and signed the option deal with Rio Tinto Exploration Canada Ltd.

“We are extremely pleased to partner with Rio Tinto to further develop the potential of the project,” Shore Gold president and CEO Ken MacNeill said in a statement. “Rio Tinto is one of the few companies in the world with the resources and expertise to move forward with a project of the magnitude of the Star-Orion South Diamond Project.”

Before the deals closed, Shore owned 69 per cent of the diamond project — which its 2011 feasibility study concluded will cost about $2.5 billion to turn into a producing mine — while Newmont Canada FN Holdings ULC owned 31 per cent. Under the terms of the buyback, Newmont will end up with almost 20 per cent of Shore’s shares plus $3.2 million if a mine is developed.

The company’s deal with Rio Tinto, meanwhile, is divided into four phases, each of which allows the global mining giant’s subsidiary to acquire a stake in the project in exchange for completing exploration and development work or making payments in lieu of those expenditures. If Rio Tinto chooses to complete all four phases, it will own 60 per cent of the project.

Rio Tinto representatives did not immediately respond to a request for comment on Friday.

Shore Gold is currently working on an updated feasibility study, which MacNeill has said will “significantly” reduce the project’s capital costs. The company obtained environmental approval from the federal government for the project in 2014, but consultations with nearby James Smith Cree Nation aimed at securing provincial approval are still underway.

James Smith Cree Nation Chief Wally Burns told the Saskatoon StarPhoenix last month that he was “not impressed” with the company’s communication efforts, and that he wanted a meeting with MacNeill and its other executives.

The company is also expected to be at the centre of a proxy battle at its next annual general meeting, which was scheduled for June 30 but postponed last month to a later date. The SGF Shareholders Association Inc., a group of shareholders concerned about the company’s direction, came close to ousting three of its directors at a controversial meeting last June.

This is not the first major diamond exploration deal to be inked in recent months. Late last year, De Beers Canada Inc. abandoned its seven-year, $20.4-million option agreement with CanAlaska Uranium Ltd. after concluding that kimberlite “targets” on the northern Saskatchewan property likely consisted of magnetic and organic materials.

 

Rio Tinto takes a shine to diamond project near Prince Albert, Sask.

Rio Tinto takes a shine to diamond project near Prince Albert, Sask.

Company signs option agreement committing it to spend $18.5 million in next 3 years

CBC News

Posted: Jun 25, 2017 5:00 AM CT Last Updated: Jun 25, 2017 2:15 PM CT

Shore Gold core sample storgae

Shore Gold Inc., a Saskatoon-based exploration company with a diamond project near Prince Albert, has attracted the interest of Rio Tinto, the world’s second largest diamond miner. (Shore Gold Inc.)

The world’s second largest diamond mining company is showing interest in a diamond project near Prince Albert, Sask.

Rio Tinto has signed an option agreement positioning it to potentially become the majority owner of an advanced-stage diamond exploration project about 60 kilometres east of Prince Albert.

The Star-Orion South Diamond Project has been developed for years by Saskatoon-based Shore Gold Inc., which signed its agreement with Rio Tinto on Friday.

Shore Gold FALC area map
The Star-Orion South Diamond Project is located about 60 kilometres east of Prince Albert. (Shore Gold Inc. )

“Rio Tinto wouldn’t be involved in something that wasn’t world-class status,” says New York City-based analyst Paul Zimnisky, who tracks the global diamond industry.

“They’re large enough of a company where they can make the capital commitment to put this thing in production.”

Estimated mine life: 20 years

A feasibility study released by Shore in 2011 cited a potential mine life of 20 years — though Zimnisky says the project has the potential to be mined for 100 years — and an estimated capital cost of $1.9 billion.

An updated feasibility study aimed at lowering that cost is expected from Shore.

The company also needs to receive environmental approval from the provincial government.

Saskatchewan is currently not home to any diamond production.

3 years to spend $18.5 million

Under the terms of the agreement, Rio Tinto has three years to spend $18.5 million on drilling and the pulling of a bulk sample before it can move on to receive the option of becoming a joint-venture partner and eventually owning 60-per-cent of the project.

But Zimnisky says it could still be as many as 10 years until the mine goes into production.

He says one challenge the project faces is its amount of “overburden” — the degree of material that needs to be removed first before reaching the diamond-bearing kimberlites.

Zimnisky says Shore is looking at ways to address that as well as X-ray technology to speed up the processing of diamonds within a plant.

The company’s stock price closed at $0.34 on Friday, the highest it’s reached in five years.

SHORE GOLD ANNOUNCES ACQUISITION FROM NEWMONT TO CONSOLIDATE STAR-ORION SOUTH DIAMOND PROJECT AND EARN-IN WITH RIO TINTO

NEWS RELEASE June 23, 2017

Stock Symbol: SGF: TSX Saskatoon, Saskatchewan

 

SHORE GOLD ANNOUNCES ACQUISITION FROM NEWMONT TO CONSOLIDATE STAR-ORION SOUTH DIAMOND PROJECT AND EARN-IN WITH RIO TINTO

 

Shore Gold Inc. (TSX: SGF) (“Shore” or the “Corporation”) is pleased to announce today that it has

acquired (the “Newmont Acquisition”) from Newmont Canada FN Holdings ULC (“Newmont Canada”)

all of Newmont’s participating interest in the Fort à la Corne joint venture (the “FalC JV”), resulting in

Shore owning 100% of the Star-Orion South Diamond Project (the “Project”), and has concurrently

entered into an Option to Joint Venture Agreement (the “Option Agreement”) with Rio Tinto Exploration

Canada Inc. (“RTEC”) pursuant to which the Corporation has granted RTEC an option to earn up to a

60% interest in the Project on the terms and conditions contained in the Option Agreement. All dollar

figures herein are in Canadian dollars unless otherwise indicated.

 

In connection with the Option Agreement, RTEC has also agreed to subscribe for units of the Corporation

for an aggregate subscription price of $1,000,000 at a price of $0.18 per unit, with each unit consisting of

one common share in the capital of the Corporation and one common share purchase warrant, with each

warrant entitling RTEC to acquire one additional common share at a price of $0.205 per share for a period

of 24 months following the issuance of the units.

 

“We are extremely pleased to partner with Rio Tinto to further develop the potential of the project” said

Ken MacNeill, Chief Executive Officer of Shore. “Rio Tinto is one of the few companies in the world

with the resources and expertise to move forward with a project of the magnitude of the Star-Orion South

Diamond Project. We are also very pleased to acquire the remaining portion of the project from

Newmont and look forward to working with Newmont as a significant shareholder”.

 

Summary of the Newmont Acquisition

The Newmont Acquisition was completed pursuant to a Participating Interest Purchase Agreement

effective as of June 22, 2017 between Shore, its wholly owned subsidiary, Kensington Resources Ltd.,

and Newmont Canada whereby Newmont Canada sold its entire interest in the FalC JV to Shore in

consideration for approximately 53.8 million common shares of Shore and 1.1 million common share

purchase warrants, with each warrant entitling Newmont Canada to acquire one additional common share

at a price of $0.349 per share for a period of 45 months from the date of issuance. Prior to the completion

of the Newmont Acquisition, Shore held a 69 percent interest in the FalC JV and Newmont Canada had a

31 percent interest. Under the terms of the warrants and the rules of the TSX, Newmont Canada is not

permitted to exercise warrants if, as a result of such exercise, it would beneficially own or control 20% or

more of the outstanding shares of the Corporation, subject to certain exceptions including approval by the

shareholders of the Corporation.

 

As additional consideration for Newmont Canada’s interest in the FalC JV, the Corporation has agreed to

grant Newmont Canada a participation right to subscribe for and purchase such number of common shares

in order to maintain its proportionate interest in the share capital of the Corporation; Newmont Canada

may exercise this right each time Shore undertakes financing (subject to certain exemptions) at the same

price and terms as the financing. The Corporation has also agreed that Newmont Canada will receive a

contingent payment in the aggregate amount of $3,200,000 if a positive decision is made to develop a

mine on the Project. Shore, in its sole discretion (subject to regulatory approvals), may satisfy the

contingent payment due to Newmont Canada through a cash payment or the issuance of common shares

priced at the VWAP at that time. The Participating Interest Purchase Agreement relating to the Newmont

Acquisition contains representations, warranties, covenants and indemnities as customary for transactions

of this nature.

 

Newmont Canada currently holds approximately 17 million common shares in the capital of the

Corporation representing approximately 5.7% of the common shares outstanding and issued on a nondiluted

basis. Immediately after the closing of the Newmont Acquisition and issuance of common shares,

Newmont Canada will hold approximately 19.9% of the common shares issued and outstanding on a nondiluted

basis.

 

Consolidation of the Project

Following the Newmont Acquisition, Kensington transferred its interest in the FalC JV to Shore and

thereafter, the FalC-JV was terminated, resulting in Shore holding 100% of the Star-Orion South

Diamond Project.

 

Summary of the Rio Tinto Option Agreement

Pursuant to the Option Agreement, the Corporation has granted to RTEC four options which in aggregate

permit RTEC to earn a 60% interest in the Project, as follows:

 

First Option. RTEC has the exclusive right to conduct a 10 hole bulk sampling program on the Project,

including processing and diamond recovery, or incur $18.5 million of direct and indirect expenses in

connection with mineral prospecting, exploration, development, mining, and related expenses

(“Expenditures”). Completion of the First Option does not entitle RTEC to an interest in the Project.

 

Second Option. Provided RTEC completes the First Option, RTEC has the exclusive option to acquire

51% of the Project by conducting a 10 hole bulk sampling program on the Project or incurring $18.5

million of Expenditures.

 

Third Option. Provided RTEC completes the Second Option, RTEC has the exclusive option to acquire an

additional 4% undivided interest in the Project by conducting a 10 hole bulk sampling program on the

Project or incurring $18.5 million of Expenditures.

 

Fourth Option. Provided RTEC completes the Third Option, RTEC has the exclusive option to acquire an

additional 5% undivided interest in the Project by completing a feasibility study in respect of the Project

or incurring an additional $15 million of Expenditures.

 

RTEC has three years to complete the First Option, 18 months from completion of the First Option to

complete the Second Option, 18 months from completion of the Second Option to complete the Third

Option and 18 months from completion of the Third Option to complete the Fourth Option; in aggregate,

the time from the effective date to the end of the Fourth Option cannot exceed 7.5 years. RTEC may, at its

discretion, conduct operations to exercise the options in parallel, and may at any time make a payment to

Shore in lieu of any expenditures.

 

At any time after RTEC has earned an interest in the Project, RTEC may elect to form a joint venture with

Shore. If after RTEC has earned an interest in the Project, RTEC allows an option to expire or terminates

the Option Agreement, RTEC will be deemed to have elected to form a joint venture with Shore. Under

the Option Agreement, each party has granted the other a right of first refusal with respect to the sale of

its interest. During the option periods RTEC will conduct all operations, provided that during the First

Option RTEC may appoint Shore to conduct operations.

 

The Project

The Star-Orion South Diamond Project is located in central Saskatchewan approximately 60 kilometres

east of the city of Prince Albert. The Project is in close proximity to established infrastructure, including

paved highways and the electrical power grid, which provide significant advantages for future mine

development. The Technical Report on the Revised Resource Estimate for the Star-Orion South Diamond

Project dated November 9, 2015 provided an updated Mineral Resource Estimate for the Star and Orion

South kimberlite deposits: Indicated Mineral Resource of 393 million tonnes containing 55.4 million

carats of diamonds at a weighted average price of US$210 per carat. In addition to the Indicated Mineral

Resource Estimate, the Star and Orion South Kimberlites include Inferred Resources containing 11.5

million carats.

 

All technical information in this press release has been prepared under the supervision of George Read,

Senior Vice-President of Exploration and Development, Professional Geoscientist in the Provinces of

Saskatchewan and British Columbia, and Mark Shimell, Project Manager, Professional Geoscientist in the

Province of Saskatchewan, who are the Corporation’s “Qualified Persons” under the definition of NI 43-

101.

 

Advisors

Canaccord Genuity Corp. acted as financial advisor and Bennett Jones LLP acted as legal advisor to

Shore. Lawson Lundell LLP acted as legal advisor to RTEC. Goodmans LLP acted as legal advisor to

Newmont.

 

About Shore

Shore is a Canadian based corporation engaged in the acquisition, exploration and development of

mineral properties. Shares of the Corporation trade on the TSX Exchange under the trading symbol

“SGF”.

 

About Newmont

Newmont Canada is a subsidiary of Newmont Mining Corporation (“Newmont”). Newmont is a leading

gold and copper producer. Newmont’s operations are primarily in the United States, Australia, Ghana,

Peru and Suriname. Newmont is the only gold producer listed in the S&P 500 Index and was named the

mining industry leader by the Dow Jones Sustainability World Index in 2015 and 2016. Newmont is an

industry leader in value creation, supported by its leading technical, environmental, social and safety

performance. Newmont was founded in 1921 and has been publicly traded since 1925.

Newmont Canada will evaluate its investment in the Corporation from time to time and may, based on

such evaluation, market conditions and other circumstances, increase or decrease shareholdings as

circumstances require. The exemption relied on for the acquisition of the common shares in connection

with the Newmont Acquisition is Section 2.12 of National Instrument 45-106 – Prospectus and

Registration Exemptions. A copy of the early warning report filed by Newmont Canada in connection

with the acquisition will be available on Shore’s SEDAR profile. In order to obtain a copy of the early

warning report, please contact Meredith H. Bandy, Vice President, Investor Relations at Newmont

Canada, at telephone number: 303-837-5143. Newmont Canada’s head office is located at 6363 South

Fiddler’s Green Circle, Suite 800, Greenwood Village, CO 80111.

 

Caution Regarding Forward-Looking Statements

This press release contains “forward-looking statements” and/or “forward-looking information”

(collectively, “forward-looking statements”) within the meaning of applicable securities legislation. All

statements, other than statements of historical fact, are forward-looking statements. Generally, forwardlooking

statements can be identified by the use of forward-looking terminology such as “plans”, “expect”,

“is expected”, “in order to”, “is focused on” (a future event), “estimates”, “intends”, “anticipates”,

“believes” or variations of such words and phrases or statements that certain actions, events or results

“may”, “could”, “would”, or the negative connotation thereof. In particular, statements regarding Shore’s

future operations, future exploration and development activities or other development plans constitute

forward-looking statements. By their nature, statements referring to mineral reserves or mineral resources

constitute forward-looking statements. Forward-looking statements in this press release include, but are

not limited to statements with respect to the work programs under the Option Agreement and estimates of

mineral resources.

 

These forward-looking statements are based on Shore’s current beliefs as well as assumptions made by

and information currently available to it and involve inherent risks and uncertainties, both general and

specific.

 

Risks exist that forward-looking statements will not be achieved due to a number of factors including, but

not limited to, developments in world diamond markets, changes in diamond prices, risks relating to

fluctuations in the Canadian dollar and other currencies relative to the US dollar, changes in exploration,

development or mining plans due to exploration results and changing budget priorities of Shore or its joint

venture partners, the effects of competition in the markets in which Shore operates, the impact of changes

in the laws and regulations regulating mining exploration, development, closure, judicial or regulatory

judgments and legal proceedings, operational and infrastructure risks and the additional risks described in

Shore’s most recently filed Annual Information Form, annual and interim MD&A. Shore’s anticipation of

and success in managing the foregoing risks could cause actual results to differ materially from what is

anticipated in such forward-looking statements.

 

Although management considers the assumptions contained in forward-looking statements to be

reasonable based on information currently available to it, those assumptions may prove to be incorrect.

When making decisions with respect to Shore, investors and others should not place undue reliance on

these statements and should carefully consider the foregoing factors and other uncertainties and potential

events. Unless required by applicable securities law, Shore does not undertake to update any forwardlooking

statement that is made herein.

 

Note Regarding Mineral Resources

Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The

estimation of Mineral Resources may be materially affected by environmental, permitting, legal, title,

taxation, socio-political, marketing or other relevant issues.

For further information: shoregold@shoregold.com or (306) 664-2202

www.shoregold.com

– END –

James Smith Cree Nation chief wants meeting with Shore Gold executives

James Smith Cree Nation chief wants meeting with Shore Gold executives

Alex MacPherson, Saskatoon StarPhoenix

Published on: June 9, 2017 | Last Updated: June 9, 2017 5:10 PM CST

Shore Gold FALC aerial
An aerial view of Shore Gold Inc.’s proposed diamond mine in the Fort à la Corne forest east of Prince Albert. Shore Gold Inc. / Saskatoon

The chief of a First Nation near a proposed diamond mine in the Fort à la Corne forest east of Prince Albert says he is “not impressed” with communication from the company behind the project, and wants to meet with its executives to discuss the project’s potential environmental impact.

James Smith Cree Nation Chief Wally Burns called for the meeting with Shore Gold Inc. days after the company announced it was in “preliminary negotiations” with an unnamed third party over its mineral properties and as a separate six-month consultation process with the provincial government comes to a close.

“All I’m asking is for them to come to my community and come and express their thoughts with my people,” Burns said, adding that the last Shore Gold executive he met with was its former vice-president of corporate affairs, who left the Saskatoon-based company in early 2012 as it worked to reduce costs in the face of global economic uncertainty.

Burns said while he is not opposed to the $2.5 billion-mine going ahead, the ongoing effects of the Husky Energy Inc. pipeline spill into the North Saskatchewan River last July made him more aware of the importance of preserving his band’s traditional hunting and fishing lands.

“I think my people have known this forest for a long, long time,” he said.

Shore Gold staked its first claim in the forest in 1995. The mine project received environmental approval from the federal government in 2014; former environment minister Leona Aglukkaq said at the time it was “not likely to cause significant adverse environmental effects when (proposed) mitigation measures … are taken into account.”

The company has not, however, received environmental approval from the provincial government.

Earlier this year, the Saskatchewan government committed $137,000 to a second round of consultations with James Smith Cree Nation after a public review uncovered what a government official described as “issues that had not been addressed.”

Ministry of Environment spokesman Darby Semeniuk said in an email this week that the consultations began in early 2017 and are “on track.” Once the consultations are concluded, the ministry will “evaluate all pertinent information” before deciding whether to issued environmental approval for the mine, Semeniuk said.

Shore Gold president and CEO Ken MacNeill said the company has not heard from the James Smith Cree Nation since the groups exchanged letters earlier this year. However, MacNeill continued, “we can understand that because they’re doing an awful lot of work with the government and we fully support both sides on that.”

MacNeill did not specifically commit to meeting with Burns, but said the company is looking forward to hearing from James Smith Cree Nation. Shore Gold is also looking forward for a response from the Ministry of Environment, which has not to date made any further requests for information, he added.

Shore Gold’s communication efforts have also been criticized by some of its shareholders. At its annual meeting last June, a contentious proxy vote engineered by concerned shareholders came within a few percentage points of ousting three of the company’s directors. Shore Gold’s chairman deemed the vote illegal but allowed the results to stand.

 

 

 

Shore Gold confirms ‘preliminary’ deal negotiations as share price hits five-year high

Shore Gold confirms ‘preliminary’ deal negotiations as share price hits five-year high

ALEX MACPHERSON, SASKATOON STARPHOENIX
Published on: June 5, 2017 | Last Updated: June 5, 2017 4:53 PM CST

 shore-gold

Shore Gold Inc’s Star-Orion-South diamond property east of Prince Albert, Sask. SASKATOON

A Saskatoon-based diamond exploration and development company has confirmed it’s in “preliminary negotiations” with an unnamed third party about a transaction involving its mineral properties.

Shore Gold Inc. issued the statement Monday, a few days after speculation surrounding the unexpected cancellation of its annual meeting drove its share price to a five-year high of $0.435. Its share price last climbed above $0.40 in early 2012.

“No agreement has been reached and there is no assurance that these discussions will continue or that any transaction will be agreed upon,” Shore Gold said in a terse statement, which it said was issued in response to “recent trading activity” involving its shares.

“If the discussions result in agreement upon a transaction, of which there is no certainty at this time, an announcement will be disclosed in accordance with applicable legal and regulatory requirements,” the statement said.

Shore Gold announced last week that the meeting, which had been scheduled for June 30, would be held later in the year. The new date for the 2017 meeting has not been set “but it is anticipated that it will be set shortly,” the company said in a news release.

Ken MacNeill, the company’s president and CEO, said last week that the board decided “it’s the best thing for the corporation to hold it a little later.” MacNeill said he could not comment further as he cannot speak on behalf of the board of directors.

Shore Gold has been working to establish a $2.5 billion diamond mine on its Star-Orion property in the Fort à la Corne forest east of Prince Albert since 1995. Its updated feasibility study is expected to project a “significant” reduction in capital costs.

The postponement comes three months after the SGF Shareholders Association Inc., a group of Shore Gold investors concerned about the company’s direction and communications, said it planned to continue working to shake up its board of directors.

A controversial proxy vote at the company’s last annual meeting in June 2016 came within a few percentage points of unseating three of its directors. Shore Gold’s chairman deemed the vote illegal but allowed the results to stand.

Reached by phone, SGFSA spokesman David Wright said the association was not yet ready to comment on the meeting’s postponement.

 

 

 

SHORE GOLD RESPONDS TO RECENT TRADING ACTIVITY

Shore Gold

NEWS RELEASE

June 5, 2017

Stock Symbol: SGF:

 

TSX Saskatoon, Saskatchewan SHORE GOLD RESPONDS TO RECENT TRADING ACTIVITY Shore Gold Inc. (TSX:SGF) (“Shore”) today issued, at the request of IIROC, on behalf of the Toronto Stock Exchange, the following statement in response to the recent trading activity in its common shares:

Shore is engaged in preliminary discussions regarding a potential transaction with a third party involving an earn-in on Shore’s mineral properties. However, no agreement has been reached and there is no assurance that these discussions will continue or that any transaction will be agreed upon. Until such time as it is appropriate to make a public announcement on any potential transaction, should one occur, Shore Gold will not comment further on this matter. If the discussions result in agreement upon a transaction, of which there is no certainty at this time, an announcement will be disclosed in accordance with applicable legal and regulatory requirements.

Caution Regarding Forward-Looking Statements

This press release contains “forward-looking statements” and/or “forward-looking information” (collectively, “forward-looking statements”) within the meaning of applicable securities legislation. All statements, other than statements of historical fact, are forward-looking statements. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expect”, “is expected”, “in order to”, “is focused on” (a future event), “estimates”, “intends”, “anticipates”, “believes” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, or the negative connotation thereof. These forward-looking statements are based on Shore’s current beliefs as well as assumptions made by and information currently available to Shore. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution readers not to place undue reliance on these statements as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements.

 

 

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